GuptaLeaks: Kickbacks For Transnet Crane Contracts

"The cranes that are being supplied to the ports from [Shanghai Zhenhua] are with Guptas. Ask Liebherr."

The #GuptaLeaks have revealed that two more companies that won Transnet tenders paid tens of millions to Gupta offshore fronts.

Bank and accounting records show that two heavy equipment manufacturers – Swiss-based Liebherr-International AG and China's Shanghai Zhenhua Heavy Industries Limited – funnelled nearly R100-million to the Guptas, as Transnet awarded them contracts to supply cranes to South African ports.

This brings to seven the number of large, mostly respected companies, known to have secretly paid Gupta fronts in connection with Transnet contracts.

A forgotten tipoff

Four years ago, an anonymous tipster told amaBhungane that Transnet crane suppliers were paying off the Guptas to get their contracts.

The tipster said: "The cranes that are being supplied to the ports from [Shanghai Zhenhua] are with Guptas. Ask Liebherr. While they were the preferred supplier, they were approached by Guptas to do a deal who then referred them to their local [black economic empowerment] partners, who in turn spoke to [then Public Enterprises Minister] Malusi Gigaba. By then Guptas had done a deal with [Shanghai Zhenhua]."

Days before the tipoff, Gigaba and then Transnet CEO Brian Molefe had stood side-by-side, grinning behind a giant red ribbon, which Gigaba cut in presentation of seven new Shanghai Zhenhua cranes for South Africa.

On the day, Molefe told reporters the tender was "transparent".

Molefe later moved to Eskom, which he recently left in disgrace after evidence emerged that he courted the Guptas while Eskom and Transnet closed allegedly dirty deals for the Guptas.

On Saturday, Transnet spokeswoman Viwe Tlaleane said: "The company is conducting its own internal enquiry and will investigate all allegations made. Where appropriate, it will enlist the services of independent experts, depending on the required expertise".

Liebherr executive Dieter Schmid said: "I can assure you that Liebherr has never had an 'extensive and direct relationship with the Guptas for years' as alleged in your e-mail." But he said the company was "still putting the pieces together" and needed more time.

Shanghai Zhenhua did not respond to questions.

Paying to play

As was claimed by amaBhungane's tipster, Liebherr's Gupta payments were indeed preceded by roughly R55-million from the Chinese.

In September 2011, Transnet announced that Shanghai Zhenhua would build, deliver and commission seven tandem-lift ship-to-shore cranes for the container terminal at Durban harbour.

According to Transnet documents obtained by amaBhungane, it would pay Shanghai Zhenhua $92-million (about R1.2-billion today) for the job.

Three months later, money started to flow to the Guptas.

Shanghai Zhenhua paid the first tranche of US$969 086 (R12.6-million) that December. According to the Guptas' accounting records, it went to a United Arab Emirates-registered company called JJ Trading.

JJ Trading has also featured prominently in another Transnet kickback scheme.

For every tranche of cash received from Shanghai Zhenhua, JJ Trading transferred exactly 4% to a person called "David", sometimes as cash. The rest flowed to Gupta front companies in the UAE and South Africa.

For example, at the end of January 2013, Shanghai Zhenhua paid US$1.2-million (R15.6-million) to JJ Trading.

AmaBhungane's investigation revealed that in March 2015, Burlington – a subsidiary of advisory firm Regiments Capital – signed a R5-million contract with Liebherr-Africa to provide it with "market feasibility studies" in relation to the supply of cranes to Transnet.

Liebherr made a R2-million down payment to Burlington, which paid exactly 90% straight on to a Gupta front, Homix.

At the time, Liebherr told amaBhungane that Homix was unknown to it. It is now clear that Liebherr's R2-million laundered to Homix was just the tip of the iceberg. The #GuptaLeaks reveal that the family received roughly $3.2-million (R42-million) from Liebherr over the course of a year and a half.

Bank records show that in July 2013 Liebherr paid US$905 000 (R11.8-million) to another of the Guptas' UAE front companies, Accurate Investments.

We have seen no specific evidence of Transnet rigging the crane tenders to favour Liebherr and Shanghai Zhenhua.

However, the payments to offshore Gupta fronts and contemporaneous contract awards trace a Transnet tender pattern that is now well known. Liebherr and Shanghai Zhenhua bring the number of Transnet contractors who have paid the Guptas or partnered with their companies to seven.

Despite strident denials of wrongdoing from SAP's local managing director following these revelations, SAP's international headquarters quickly suspended four South African executives and announced it had hired US law firm Baker McKenzie to investigate.

China South Rail: Last month, amaBhungane and Scorpio exposed a R5.3-billion kickback contract between China South Rail (CSR) and a Gupta company in Hong Kong, after CSR won contracts worth roughly $25-billion (R325-billion) to supply Transnet with locomotives.

The contract and other #GuptaLeaks accounting records describe how CSR initially paid JJ Trading and a related Dubai company $124-million (more than R1.6-billion) kickbacks for these contracts. The funds were passed on to Gupta companies.

Recall that Shanghai Zhenhua also paid JJ Trading before the money flowed to the Guptas. In light of the CSR kickback documents, it is possible that similar agreements underlie Shanghai Zhenhua and Liebherr's crane contracts.

McKinsey: Last year, amaBhungane reported how global consultancy McKinsey won Transnet contracts that were gradually ceded to Regiments Capital and the Gupta-linked group Trillian, which marched off with Transnet contracts worth at least R484-million. Regiments in turn paid R84-million to the Gupta front Homix.

A recent investigation by Advocate Geoff Budlender exposed how McKinsey partnered with Trillian, in a "sham" contract that would milk Eskom.

Neotel: In 2015, amaBhungane exposed how telecoms firm Neotel paid tens of millions of rands in "commissions" to Homix to clinch deals worth more than R2-billion from Transnet.

"Some of these reports cast aspersions on the integrity of the company's governance processes, especially relating to procurement. Transnet views good governance and the integrity of its processes seriously. In this regard, we have put in place various measures to safeguard this integrity. Any breach or allegation of breach is viewed in a serious light.

"Transnet did not make any payments to third parties and has no knowledge of the alleged transactions. Part of the company's investigation entails approaching suppliers for their perspective on the allegations.

"Should any actionable facts arise, remedial action will be taken."

KPMG see no evil – Part 2

For the second time, the #GuptaLeaks show what look like kickbacks flowing into a Gupta company audited by KPMG.

The Guptas used some of dairy money to pay for their now notorious Sun City wedding, which KPMG allowed them to write off as a business expense.

To justify this tax write-off, KPMG later claimed that, based on facts known to it, Accurate was not a Gupta company but was "related to" the father of the Sun City bride. AmaBhungane has yet to discover anything among the millions of pages of documents contained in the #GuptaLeaks to support this.

Crane manufacturer Liebherr's cash followed the same trail.

Liebherr sent the money to Accurate in Dubai, where it was quickly bundled with other funds flowing through the Guptas' Dubai bank accounts and, in part, laundered to South Africa.

KPMG did not respond to amaBhungane's questions about Accurate's popping up yet again in Linkway's accounts.

In sum – during the financial year ending 28 February 2014 – funds originating from at least two government entities, the Free State and Transnet, were laundered via Accurate in the UAE to Linkway on KPMG's watch.

KPMG previously said: "We stand by our audit opinion issued."

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